Freedom And Inspiration
William
Wallace (Mel Gibson) addresses thousands of Scottish soldiers who are
about to face a formidable English army.
William Wallace:
Sons of Scotland, I am William Wallace.
Soldier: William Wallace is 7 feet
tall.
William Wallace: Yes, I’ve heard.
Kills men by the hundreds. And if he were here, he’d consume the
English with fireballs from his eyes and bolts of lightning from his
arse.
(all
laugh as he addresses the crowd). I
AM William Wallace. And I see a whole army of my countrymen here in
defiance of tyranny. You’ve come to fight as free men, and free men
you are. What will you do without freedom, will you fight?
Soldier: Fight? (pointing to the
English forces across the field) Against
that? No, we will run! And
we will live!
William Wallace: Fight and you may
die. Run and you’ll live, at least for a while. And dying in your beds
many years from now, would you be willing to trade all of this from
this day to that, for one chance, just one chance, to come back here
and tell our enemies that they may take our lives, but they’ll never
take (thrusting his sword into the air) OUR FREEDOM! Alba gu brath!
(The Scots cheer “Alba gu brath” repeatedly. Across the
field, the English watch the shouting Scots.)
from “Braveheart“
Two very prominent figures shaped my thought
processes early in my life. These two figures were a father
who fought valiantly in Europe in WWII and a martial art instructor
who was from the “old school” (this was way, way before the
days of sensitive, hands-off training). Both men were fighting
machines. If you said the wrong thing or did the wrong thing around
either one, you would find yourself either dropping to the
ground for fifty pushups (the favored scenario) or the recipient of a
combination roundhouse punch/uppercut to the gut (the not-so favored
scenario). With both guys, you had to bring your “A” game
all the time. With both guys, a common theme ran consistently through
all my years with them:Â “you can
talk the talk, but can you walk the walk?” Loosely
translated into stock market language this becomes:Â “money
talks and b.s. walks.“Â
We heard and saw several market strategists and revered commentators
urge us to disregard the market’s action this week because the volume
was light and the thin pre- and post-holiday trade was not to be read
that much in to. This week was to be regarded as a holiday-induced
anomaly. Yes, we are being instructed to disregard the fact that the
indexes have broken down below their June lows and many have pointed
out an island reversal formation that would lead to higher prices.
Disregard the fact that the advance/decline ratio in the NYSE has now
shifted the McLellan summation index into a full blown sell signal,
with a similar “hook” pattern that marked the NYSE top in
March. Ignore the fact that institutions front-ran and faded Microsoft
as hard as we have ever witnessed after the groundbreaking appellate
court ruling that was supposed to ignite a sustained fire under the
tech sector (see comments for the past 6 trading sessions by Jack
Baroudjian of Commerz Futures). Just toss out the window the fact that
we have had more earnings blow-ups by once safe haven and technology
giant, (EMC)
and semiconductor giant wannabe Advanced Micro Devices (AMD).
Yes, all of these things absolutely have no meaning this week because,
as we’ve been told, this is a holiday trading week so normal market
dynamics weren’t at work because most of the institutions are gone.
Au contraire.
Here in Chicago the institutions were busy beavers in the futures
pits, selling the market as hard as humanly possible. Should I have
disregarded the fact that Goldman Sachs, Morgan Stanley, Bear Stearns,
and Merrill Lynch were all selling their collective heads off this
week? Tell me a bedtime story and tell me everything is going to
be just swell next week when the institutions come back to “buy
up everything in sight” like we were promised on August 31 of
2000 (remember the excitement and buzz about traders coming back from
Labor Day vacation in the Hamptons?)
To make matters worse, we saw some individuals (who shall remain
unnamed) come out and pull their Muhammad Ali “I’m the
Greatest” this week and in the process of their
self-aggrandizement scorch the earth around them. Over the years of
being a professional trader and market timer, I’ve never felt the
necessity to compete with others around me who do the same thing.
Ethnic diversity is what makes this Country great and so too does
diversity of opinions make the markets the “great game” that
they are. The bottom line here is: who has
walked the walk and not just talked the talk? Who has
aided your analysis and helped you make money? Once
again, money talks and b.s. walks.
If
you made money this week by playing the technicals and the charts and
disregarding the silliness and rhetoric, congratulations. “But
Gman, don’t you see the ‘buy signals’ everyone is talking about with
the Arms Index etc?”Â
Of
course
I see it.
Trust me
when I say this to you: with my office’s computer setup and technical
analysis, I can pick up someone coughing on the floor of the NYSE. I
also see a lot of other conflicting signals that don’t set up a
“close your eyes and buy” scenario. Why have I been calling
for a move below the June lows for the past few weeks as others have
been shouting “breakout” and “go long” at the tops
of their lungs? Because I don’t believe any one single indicator
to be the definitive buy or sell indicator for the market.Â
As you spend more time examining the writings of different market
timers, you will notice that many of them have their own favorite or
proprietary indicators. I like to consider myself a “free
agent” and as such, examine and consider a wide range of data and
signals from a variety of different schools of analysis. Does
this make me opinionated, as many suggest? I suspect that many
have gotten this impression because of my eagerness to short any and
all rallies that have materialized since I’ve joined TM. Too bad I
wasn’t here last year when my accounts went margined short the Nasdaq
in March, when many were calling for the rally to continue higher to
Nasdaq 6000. That would have been a radical stance to have taken at
the time, and would have probably created quite a coup amongst the
bullish legions. My goodness, just the thought of how much bigger of a
bear I would be painted as makes me shudder. Oh hey, but let’s not
forget the bottom line. Has this strategy made money? You bet
your Christopher and Banks clothing it has! Has fading the Fed
made money? You bet your Nvidia graphics card it has! But, holy
buying opportunity Batman, hasn’t the market always started to recover
before the actual economy? Won’t you miss great gains if you
don’t anticipate the bottom? The answer to this question
is: I don’t trade by using hope. “Hope” is a
very dangerous word if you are a trader. My trading is based on an
analysis of truth and reality and the ability to dismiss the lies and
deception that is attempting to confuse us.
It is not my
opinion that the Nasdaq index now has a price to earnings
ratio that is “N/A” or infinity because it has no earnings.
This is a fact.
It is not my
opinion that the stock market throughout history has
followed a cycle of moving from severe undervaluation to
overvaluation, and then back again. This is a fact.
It is not my
opinion that the NYSE and the S&P 500 are at their most
historically overvalued states in the past century, it is a fact.
It is not my
opinion that the revered Federal Reserve Chairman has never
handled an economic crisis of this magnitude, it is a fact.
Greenspan and his posse have been
successful in remedying situations that were financial in nature and
not economic, i.e. LTCM crisis, Asian crisis, Russian crisis, etc.
have all been events that were financial in nature. All of these
events stimulated the Fed to cut rates and increase money supply, a
formula that worked wonders with those specific financial events.
However, the nature of the beast is different this time, and the same
elixir is clearly not going to deliver the quick remedy everyone is
anticipating and has grown accustomed too.
This is not my
opinion, this is a fact.
But can you really blame these slaves of momentum trading for trying
to wish back the old days? Can you blame the people who made tons of
money by simply buying a stock today that traded over yesterday’s
high, even though it was up double digits the day before? Those were
the days my friend, we all wish they’d never end. But they did, and
they’re not coming back. So, adapt to the new environment or become a
dinosaur. From this point onward, you have to make the decision as
William Wallace asked his troops. Are you with me or not? Do you find
my commentary useful or not? If you don’t, stop reading this
commentary and stop bashing, it’s as simple as that. If my style
offends you, don’t use it. If you are making historically high profits
like my office is, then let’s unite and go to war together. It’s just
that easy. If you need me, I’m here for you and will continue being
here for you. This is your
opportunity to declare your freedom from the past and what Wall Street
wants to force-feed you. Are you willing to fight for your freedom?
My
analysis of the market remains the same as it has been since last
week: we clearly are going to probe lower levels of support. I
have pointed out these areas many times in the past week, so don’t
want to duplicate the same charts, etc. etc. It was a great week for
us, and a great week for technical analysis. Let’s have a restful
weekend and bask in the glory of America’s freedom.
Goran